Friday, August 24, 2012

This is the
third of our (just about) weekly email and blogs and thanks for the comments on
the first two. The blog
is still in an experimental stage so bear with us if we have some technical
problems. Don’t forget, if you have any information and you think it is the
sort of thing that would fit the ethos of the blog and email, send it to us to
circulate and post; if you wish to comment please feel free to do so on the
blog; and if you are a WLG member, please submit posts.

Next Welsh Labour Grassroots meeting
and other forthcoming events

The next WLG
meeting will take place on Saturday 8th September at Newport Centre, Kingsway,
Newport NP20 1UH, between 11.00 am and 1.00 pm. Further details will follow
soon. Please also note that our AGM will take place in Cardiff on Saturday, 27th
October.

You may also
be interested in these other forthcoming events:

Cardiff,
Saturday 25th August: Cymru-Cuba will be presenting the film, 7 Days in Havana – in which seven
directors present their own different (fictional) views of the Cuban capital –
8.00pm at Chapter Arts Centre, Canton, CardiffCF5 1QE. Cymru Cuba will be giving a brief introduction to the current
situation in the country just before the film starts. They invite you to join
them for a drink afterwards and to visit their stand selling CDs, books and
T-shirts.

Cardiff,
Wednesday 29th August: Disabled People Against Cuts (DPAC) will be holding a
mass 'die-in' at the Aneurin Bevan Statue, Queen Street, Cardiff, at 5.00 pm,
as part of nationwide protests against ATOS, the French IT company that carries
out Work Capability Assessments for the Department for Work & Pensions
(DWP). The ‘die-in’ is intended to represent all the disabled people who have
been driven to suicide after ATOS has found them ‘fit for work’ and stopped
their benefits, or for other reasons associated with the draconian ‘welfare reforms’
introduced by the UK government. For further details, see: http://www.dpac.uk.net/

Left Week

The case of Julian
Assange has been one of the most significant issues this week, dividing
opinion, including on the left. Owen
Jones in the Independent and Seamus Milne in the Guardian are among those who
have commented. While drawing different conclusions, both writers agree on the
need to separate the serious allegations of rape, for which Assange must
answer, from the important work done by Wikileaks, which has so antagonised the
political establishment in the USA and elsewhere. Another cause celebre has
been the disgraceful imprisonment of the Russian feminist punk band, Pussy
Riot, for daring to antagonise the Putin government and the Orthodox Church. Amnesty
International, among others, is rallying support for these courageous women.
Following on from the economic discussion pieces of the last two weeks, Michael
Roberts again provides two very accessible pieces that supports the points made
and provides more evidence here and here.

Whilst there
is a build up to the Paralympics the Tories, who will try again to bask in
reflected glory, have shut down half of the 54 Remploy plants around the
country and some have vote to take four day strike action from 28 August.The thick skin and hypocrisy of this
government knows no bounds.

Events in
China need some unpicking after the murder trial and again Seamus Milne has managed to provide an insightful
context.

Left Roundup

Red Pepper is a socialist magazine that manages
to keep sectarian point scoring to the minimum and work to unite a socialist as
well as a green analysis. The latest edition is full of good articles – Syriza;
defending the NHS; community unionism; disabled fightback; - some of which are
on the website and others will be gradually posted over the next two months.
The magazine is in need of financial support so please consider a subscription
and a donation.

CLASS (Centre for Labour and Social
Studies) the new left research, activist and policy organisation has been up
and running since May and already has some excellent work and arguments
published.

CRESC is a social and economic research
unit based at Manchester University. I came across them this week as an article
in Red Pepper is based upon one of their publications. There is no reason to be
put off by the unit being based in a university; it is providing a very high
standard of evidence-based left analysis.

False Economy continue to provide a constant
supply of hard hitting arguments against the Tories; here is their latest, a
factsheet providing all those important arguments about why the deficit is not
the problem.

Labour Party

Here is the UK Labour Party link with all
the recent Party statements covering education and the Tories continued
inability to understand how get themselves off their own deficit hook even
though they are borrowing more, to no avail.

Here is the Welsh Labour Party link which
still needs keeping up to date. The Welsh Government has just started a
consultation on the future of the NHS in Wales which requires a response by
24.10.2012. All the documents can be found here and contain issues that we should
take seriously as socialists. Which ones do you think we should home in on as
WLG?

Labour MP Stella Creasy who has undertaken some excellent
work on loan sharks and around Wonga, the company that loans money against
wages, made the headlines this week when she argued that the next Labour
government should prioritise value for money, trying to shift the policy agenda
to the right, away from the rich paying for the crisis. What do you think?

Left Futures reported that Plaid has indicated
that it could be prepared to work with the Labour Party in a progressive
alliance after the 2015 election. What do you think?

Fightback

20 October
must be in every member’s diary to get themselves, family, friends, brothers,
sisters, comrades up to London for the TUC ‘A Future That Works’ demonstration.
Everyone who wishes to see an end to this Tory government should attend. Here is a link to the Coalition of Resistance leaflets and posters supporting
the demonstration.

Resolutionary socialism

Left motions
for the Labour Party conference are being circulated and it is important that
all socialists in the Labour Party raise at least one of these at your next
branch or constituency meeting, both to try to ensure the issues are discussed
at conference and that the debate is had with members.

A word of explanation
could be necessary. The first four discussion pieces from me can be criticised
for being too abstract. Laying down some foundations in the socialist tradition
is the aim, hopefully to act as an aid and reference point for more specific
policy discussions as well as being an interest in their own right. It may also
be a retired socialist indulgently working out some personal demons! Well,
whatever your view, the blog format allows any interested WLG reader to add to
the blog by posting or, by any reader commenting, so there is also a hope that
these pieces and others are transformed into a collective reference point. I’ll
soldier on for another two weeks in this vein and please feel free to join
in.This week and next week will explore
how it is possible to challenge the power of global capitalism.

Discussion – we shall overcome:
challenging the power of capitalism (1). Len Arthur

Whilst texts
such as Naomi Klein’s The Shock Doctrine (see previous blog) are both
revealing, frightening and lead to anger, they can also act unintentionally in
a contradictory way, re-enforcing a consciousness of being dominated and unable
to resist. Naomi demonstrates that ‘shock and awe’ is the intention of
perpetrators of the history she describes: the description however, requires a
consideration of effective methods of resistance, to avoid being caught in this
dilemma.

Like Wilt,
the fictional Liberal Studies lecturer of Tom Sharp’s novels, I also used to
teach the subject and remember vividly when after a number of weeks describing how
capitalism and the class system works one of the engineering apprentices
stopped me in full flow and said ‘look we agree with you, but what can we do
about it?’; then answered his own question by saying ‘nothing’. From that day
on I re-wrote the lessons to work from where the students were at, on matters
that concerned them trying to make links with the wider context; one or two may
have joined a union as a consequence, but little more could be done within the
education context. For us, in a political context, answering the ‘what can we
do about it?’ question is essential and does require some consideration of how
the exercise of power operates in our society; what are ‘the balance of
forces’; and how we can shift them in our direction.

Power, among
social scientists is a massively controversial concept. This needs to be
recognised and it is difficult to set all the issues to one side. However, the
Marxist tradition has had and continues to have much to offer if we are
interested in resisting and challenging those that currently hold power,
suggesting alternatively, that a society where power is distributed and held
effectively accountable is a viable form of democratic socialism. ‘Labour
power’ is a central concept of Marx explaining how it is central to the process
of creating and adding value. When employers employ workers it is their
potential labour power they are interested in and only then as people that can
make this contribution. Within this description is rooted the key to
understanding how power operates in capitalism: what the employer has purchased
is only a potential; power, control – otherwise known as management – has to be
exercised over the worker to extract and control as much as possible of the
value created by the application of labour power. For Marx the source of
surplus value and ultimately profit depend on the effective use of power and
control over collective and creative process of labour power. As the employer –
capitalist – needs workers to cooperate with each other and be compliant, the
contradiction is that they can resist or take back some of this power by not
cooperating and by stopping being compliant: the potential of resistance is
built into Marx’s understanding of labour power.

Labour power
being central to the operation of capitalism was, for Marx, a development of
his philosophical understanding of dialectics and his critique of the philosopher Hegel. Consequently, for Marx, society was in constant change as a result
human collective activity which takes place within a historical and physical
context as in the famous quote ‘Men make their own history... . Moreover, in his Theses on FeuerbachMarx, following a number of positional statements on the centrality of
‘human sensuous activity’ makes the statement that ‘The philosophers have only
interpreted the world, in various ways; the point is to change it.’ For me,
Marx is proposing that as change is constant, the key question is having the
power to influence the direction of change: that, as even capitalism depends
upon the difficult and often unpredictable process of influencing the future
creative acts of employees working collectively together, within that
unpredictable process lays the potential for resisting and changing the world
in our direction.

Nicos Mouzelis is a sociologist who in the 1990s has
written about power within the Marxist tradition. He has drawn upon and
synthesized many of the key writers in this area in particularly in his book ‘Sociological Theory: What went
wrong? Much that is
in this book is useful to help develop ideas about how power works in modern
society and, in particular, how it may be possible to challenge the power of
capital. Social interaction (social relationships) is, for Mouzelis, central to
understanding how society works but, like Marx, this takes place within
particular institutional and historical contexts. Mouzelis suggests that
individual actors within a particular social relationship – such as a workplace
- can have unequal access to power resources, what he calls ‘capitals’
following the work of Pierre Bourdieu .

These
capitals can be described as economic, social, political or cultural and an
actor that has a high level of access can be seen as a ‘macro’ actor and one
with less as a ‘micro’ actor. So, for example, in a workplace an employer can
be seen to have a high level of all the capitals, but particularly economic and
political (legal in this case). In addition, within an institutional setting,
actors not only experience the distribution of capitals that is part of the
structure or organization of the workplace but bring with them a ‘disposition’
from their other roles and from their personal history. These, potentially,
could conflict with the institutional capitals, particularly the social and
cultural. Then, finally, actors with these power capitals interact, say, within
the workplace situation, creating a creative social process, the outcome of
which may not be entirely predicated on the distribution of capitals – the
balance of forces – as the workers – or micro actors – may be able to challenge
the employers’ power through collective or individual negotiation. A strike
would challenge the employer in all three areas, including the institutional
and an agreed settlement may shift some power in the workers favour. It can
also be seen, for example, that an institution like a formal church service
will be dominated more by institutional interaction than say that which would
take place in a ‘rave’ or club situation, where situational interaction would
dominate.

Carter
Goodrich, in his 1923 book called The Frontier of Control, describes the ‘stand-off’ situation
over wages and piece rates in the British engineering industry as a ‘frontier
of control’ which represents a temporary agreement which both sides continue to
push against. It is possible using Mouzelis’ framework to see that a frontier
of control could be seen to exist in many other institutional settings, that
despite an unequal organizational (formal) distribution of power capitals
between actors, in the logic of disposition and in the process of interaction,
actors who could be seen as micro actors could have some capital that they
could use and accrue these over time. In the late 1960’s one of the main
bargaining aims of trade unions was something called ‘mutuality’. It
represented the idea that a long term aim of workplace bargaining was to
gradually ensure that all power of employers that affected workers was
gradually submitted to collective and joint control. It was a project to
progressively shift the frontier of control in the trade unions’ and workers’
favour.

One of the
key methods that macro actors use to maintain their power is to divide and
rule. If the micro actors whose interaction they attempt to direct and control
can be reduced to seeing themselves as having a primary individual relationship
with macro actors, it helps to change existing dispositions and reduces the
possibility of alternative interaction taking place between the micro actors.
The most nefarious tactics are adopted to achieve this. Similarly, avoiding
divide and rule and creating an alternative collective opposition is a key to
starting to shift the frontier of control toward micro actors. It is not
possible to do this abstractly and largely revolves around making grievances - issues,
problems, call them what you will - into as big as possible collective issues,
by generalizing the relevance of the social justice issues involved. This can
be readily seen in workplaces, but of course applies across all social movements,
which are strengthened by collective action.

So how does
this apply to the Labour Party and taking control through elections? Drawing
upon the interaction framework outlined, it can be seen that if a majority
among elected representatives is won, essentially the leaders of the winning
party become the macro actors, taking over the economic, political, social and
cultural power resources that come with the institution – local authority,
parliament etc. However, in the wider country or international context, these
representatives may be micro actors or up against equal or stronger macro
actors, thus challenging their ability to use their hard won electoral power.
Similarly, within the confines of the institution controlled, there is a large
constituency of employees and electors who will have dispositions and a large
range of interaction that exists beyond immediate institutional control and is thus
very available for collective mobilisation. So, if a left administration is
going to challenge other powerful institutions – such as international
corporations - it will need to look to its own constituency to try to ensure
that the potential of collective mobilisation works with it as opposed to
against it, drawing upon all four forms of social capital.

Well I hope
this makes some sense. What will be explored finally and next week, is how such
an understanding of power provides a way of answering the ‘what can we do about
it’ question, linking local issues with larger challenge to capitalism through
‘transitional demands’ and how the notion of a ‘frontier of control’ can apply not
only to situations of trade union type collective mobilisation and challenge,
but also to ‘alternative space’ type challenges through ‘transitional actions’.

Thursday, August 16, 2012

This is the second of what we
hope will be a regular – generally weekly - email from Welsh Labour Grassroots,
a network of activists of the left and centre left of the Labour Party in
Wales.

We have also set up a WLG blog where the contents
of the email will be posted, enabling followers to add comments, other
information and have a reference point. The blog also has information relating
to the basic position of WLG, a link to our existing but little used website
and, if you are a member of the Labour Party, how to join and provide support
to our activities. Sympathisers who are not LP members are most welcome to
receive and comment on our emails through our blog - just as is currently the
case on our WLG Facebook
page - and if you wish submit sources and other information to us to be added
to the posts, which may help in our discussions and joint action. All posts on
the WLG blog will be signposted through Twitter and Facebook.

Left week - LA

Olympic fervour has been
difficult avoid even by a non sporty miserablist lefty like myself. The elation
written on the faces and expressed in interviews with those who had won a medal
was simply infectious at a very human level. You could see that it was the
culmination of years of hard work and commitment. It makes the ‘and me’ jumping
up and down of some politicians seem churlish and the corporate presence
together with their biased distribution of largess – like the BMWs – just
appear pathetic.

There have some good comments
on Labour List but I’ve yet to see a socialist conclusion
drawn yet. Many will understand and know the history of the organisation and
funding of the Olympics and Britain’s improved medal position over the last 12
years better than myself but it does seem to represent, at least in part,
democratic state planning, supporting people through facilitative organisation
and investment at its best: and all taken forward by the last Labour
Government. Pity it was about competitive sport and not restructuring the
economy – well look who’s being churlish now!

Left roundup

Labour Representation
Committee news reports on preparations
for the 20 October TUC demonstration, the 68 is too late campaign both with
model motions for LP branches together with industrial action taking place
currently. All LP branches should now be making arrangements to ensure a huge
turnout of members on the 20th.

Greece has not gone on
holiday! The Coalition of Resistance reports on
how the Greek ‘austerity’ coalition government is facing new pressures from the
EU troika and how resistance is again building. Whilst in Italy the
constitutional court has ruled
against privatisation.

Following on from the
discussion piece about the growing real and ideological collapse of
neo-liberalism Labour Left suggest it is time to ‘feel some’ white collars.

Strikes are continuing to
save Remploy and if you can’t get to the picket line the GMB union has an online
petition . See also Union News.

Labour Party

Things are going quiet for
August and I notice that all the leaders have gone abroad for their hols at the
same time – national government in operation or agreed neutralising of the
issueJ.
Anyway here is UK Labour News
and that from Welsh Labour.

Owen Smith MP our shadow
secretary of state for Wales has been raising some questions about how the relationship of devolved services works
with a UK wide provision. And our Welsh Government has produced a consultation
document on promoting local democracy. It is too late to comment but raises issues that we
on the left might think about developing as the debate is sure to continue.

Welsh Labour Grassroots

Well we are getting the blog
going and some days the visitor sessions – people actually read something -
have been running at around 20, so not bad for the first week and one supporter
has added a comment. Hopefully we can iron out the inevitable bugs over the
next few weeks, so bear with us.

In the first part last week
questions were raised about the extent to which the economic ideas of Keynes
could remain central to the development of Labour policy on the economy. It was
suggested that Ed Miliband is right to start to point to the structural
weakness of the UK economy but then went on to suggest that they may actually be
more fundamental than he has so far been prepared to accept. It was suggested
that the Libor scandal was not an aberration but, on the contrary, revealed
that fixing and possible criminality, is directly related to economic power
being out of control and concentrated in rich, self interested hands.

Recently in the New Statesman
Will Hutton reviews
three books by leading radical Keynesians, including one joint authored by
Larry Elliott who was referred to last week. Will shares the criticisms of the
weaknesses of Keynes for the current situation but goes on to support Skidelsky
in the call for a new social morality as a way of achieving for “Britain, the US
and Europe need a better capitalism informed by a persuasive moral outlook that
trumps that of the right”. He refers to the need for more equality but avoids
the structural issues of power and control. Jonathan Portes also writing in
the same recent issue of the New Statesman still argues the Keynesian case that
GDP as measured per head will continue to grow if underused capacity was
brought into operation and directly supports the cake argument by ignoring
class and how GDP is increasingly unequally distributed, rendering the
beneficial effects of a per head growth questionable. Despite the crisis the
relevance of Marx is far from self evident.

So, does Marx have anything
to say to us in considering Labour Policy?

There are two economic and
social narratives dealing with the structural causes and possible answers that
seem increasingly to take proper account of our historical situation; and if
the Labour Party is going to develop effective policy in this we need to make
it take them seriously. The first relates to the renewal of analysis based upon
class – see Left Futures recently and the need to challenge the adverse effect of
inequality, both in terms of people and the economy. The second relates to the
renewal of analysis based upon Marx and the problems of an economy based on
production for profit when the rate of profit tends to fall.

Class and social inequality
is being put back on the agenda by the neo-liberal attempts to save capitalism
by forcing the working class to pay through ‘austerity’. As Lenin once argued,
capitalism will survive so long as the working class can be forced to pay the
cost. Recent research and publications have also been reflecting on these
attacks and there has been somewhat of a rapprochement between left Keynesians
and Marxists. Richard Wilkinson and Kate Pickett produced a ground breaking
book four years ago called the Spirit Level, which demonstrated on a range of criteria how
societies that were more equal were generally also more healthy and had a
higher level of well being. More recently, economists such as Stewart Lansley
in his book The Cost of Inequality, have explored how inequality
not only is an issue for social justice and health but is also directly linked
to the economic crisis, reducing effective demand and handing over trillions to
the worlds rich who have then failed to invest. More recently Joseph Stiglitz
has supported a similar analysis in his recently published book The Price of Inequality. In some respects these arguments overlap with those
put forward by David Harvey
and Richard Wolff
who use Marx’ analysis to demonstrate how profits have been preserved over the
last 30 years by driving down the returns to labour, then linking the results
to borrowing and the financial crisis. Wolff is particular good at making this
connection.

For the Labour Party these
arguments offer an opportunity to re-engage with class and the issues of
inequality as well as laying the basis of a longer term economic strategy. The
working class is under the cosh to save the bankers and profit levels. Our
slice of the cake is shrinking as opposed to growing. Not only has the
proportion of national income going to wages and salaries fallen from its peak
of 65% in the mid 1970s to around 45% in 2006 but the richer you are the greater
the increases over the same period, the bottom 10% experiencing an increase of
22% as opposed to 200% for top 10%. So the share for lower paid workers has
dropped faster barely maintaining real spending power. These trends have
continued together with the loss of other benefits for those in work, such as
pensions and family credit. For the increasing number out of work not only are
benefits being reduced but they are experiencing a form of state harassment and
terrorism, egged on by right wing papers such as the Mail and Sun. As Stewart
Lansley argues addressing such inequality will provide a rise in real consumer
incomes – still around two thirds of GDP - underpinning a long term recovery
and a sustained Keynes type boost to the demand side of the economy. There is
an opportunity for a double win if the Party wishes to be bold enough to argue
the case.

And yet is this sufficient?
The second economic and social narrative dealing with structural causes of the
crisis is the tendency of the rate of profit to fall - here and here - under
capitalist production which, as Larry Elliott suggests, is much more closely
associated with Marx. Chris Harman in his last book Zombie Capitalism sets out the detailed case for why there is this tendency in
capitalism and how it affects the global system we now live under. In relation
to the current financial crisis Harman argues that capitalist economies have
become dominated by the role of finance over the last 25 years – what he calls
‘financialisation’ – resulting from a falling rate of profit in commodity
production and a growing rate of return in dealing in finance and associated
derivatives. In essence capitalism, particularly in the West, has started to
withdraw from producing goods and services and have moved instead to just
financial transactions – such as creating deals and shifting ever larger sums
of money around – as this had become relatively more profitable. In the end no
economy can be sustained without the production of use
value and the financial crisis is the
consequence.

Michael Roberts is another
economist who has used the rate of profit analysis to explain the crisis in
very accessibly written blogs and other writings. Here is one which covers the
same issues as in this blog, here are is
a more technical but still accessible one that also doubles as a review of
another economist Andrew Kliman who has just published a book on the importance
of the same subject. The debate with Marxists such as David Harvey mentioned
above are covered here.
Another useful review of Kliman’s book and the debate covered in this blog is
also available here.

The key conclusion is that increasing
demand of itself will not necessarily result in growth unless it also has the
effect of raising the rate of profit and this can only be raised at the expense
of the working class so will have the knock on contradictory effect of
restraining demand and creating unemployment. If production of financial value
alone remains more profitable that is where the money will go: hence banks
stuff their coffers and companies go on investment strike. Capitalism in order
to maintain or increase the rate of profit will resort to every trick both in
and out of the book including criminal behaviour as well documented by Maurice
Punch in his book Dirty Business,
and by Naomi Klein in her book The
Shock Doctrine referred to in the
blog and email of last week. I’ve also explored how it relates to other
activities such as the marketisation of the public sector and the growth of
international monopolies in one of my blogs on
ZNet.

The conclusion that Michael
Roberts and the other writers come to in relation to policy and action, is that
the state has to play a greater role in the economy, as the market and profit
based capitalist system is increasingly unable to create and allocate
production and investment without great cost to society. At the very minimum
the banking and investment system should be under public democratic control,
together with the provision of goods and services serving basic needs where
income streams and output are reasonably predictable such as, health,
education, housing, social and other services and basic utilities. If the rate
of profit arguments are convincing then they have a very radical implication
for Labour Party policy.

It is clear that such a
radical challenge to neo-liberalism, the operation and role of the market and
the current system of ownership and control, would raise issues of how would it
be possible to win the power and legitimacy, to undertake such a
transformation. Naomi Klein clearly spells out the frightening extent that
state power has been used to impose the domination of private corporations
globally and finds it difficult herself to suggest how such power can be
effectively challenged. However it is clear that the bankruptcy of the system
that has been imposed on us has been exposed in the current economic crisis and
those that legitimise, benefit and run the system are currently running out of
workable options, other than to self destructively continue to attack the
working class.

This
state of affairs could mean that the balance of forces moves in our direction
if we can get our act together. It may not seem this way as the task seems huge
and our ability to resist and challenge limited but this can change quickly as
we have seen in Greece. But even in our daily circumstances there is a
‘frontier of control’ that we can engage with and in our various small ways
have a much large impact. Other organisations such as the European Left are rising to the challenge and we should think
of ways of doing so ourselves: of course, power and the balance of forces is
the subject of the next blog.

Tuesday, August 7, 2012

We know that the Tories attack on the state is a cover for
an attack our social institutions that provide collective support for the
working class. We know that they are doing this to make us pay for the bankers’
crisis. Moreover we know that even representatives of the ruling class and the
bankers’ banker the Bank of England know that their crisis is so deep that even
their free markets are rigged and are considered to be a cesspit. We also know
that New Labour supported this cesspit and is struggling to find alternative
economic and financial policies. This much as a left we agree on.

But is this an adequate description of the current crisis?
Does it provide enough analysis to develop alternative left polices for Labour
in government? We know it provides the source of great anger and unity but does
it provide enough understanding to act as a guide to us as socialists to know
how to fight back effectively in our everyday lives whatever our daily
activities and positions we hold?

Is it possible for us to go beyond our current ‘frame’ of
collective knowledge and agree on the reality that seeks to dominate us; thus connect
our agitation and actions in a way that not only effectively challenges this
reality, but also acts as a bridge to a humane, democratic and socialist
society?

There are different approaches to understanding the reality
of our predicament.As the capitalist
economic system is currently experiencing arguably its worst international
crisis ever, it makes some sense to start with that and see where we can go.

Gross Domestic
Product (GDP) is central to economic and social considerations. When we say
that capitalism is in a crisis one main indicator is falling or stagnant GDP. In
the UK it is measured quarterly so when in July this year press statements
referred to a decrease of 0.7 % of GDP they were saying that in April – June
2012 economic growth as measured by GDP was 0.7% lower than the first quarter
January – March 2012. Consequently most of the debates about economic policy
are couched in terms of how growth can be achieved again: through the ‘supply
side’ – cutting wages, costs and boosting profits; or through the ‘demand side’
increasing employment through investment and boosting real wages and
incomes.In a wider social context GDP
and its relevance is also important, as growth is linked to climate change and
debates about whether it is possible to have no or slower growth or to have
growth that does not harm the planet.

So what are the causes of the current crisis of capitalism?
Does Marx have renewed relevance? And what are the implications for Labour
Party policy?

Larry Elliott is the Guardian’s economics editor and is one
of the most accessible and prolific writers on economics around. He is a good
starting point as he presents the range of possible causes of the current
crises with clarity and an open minded honesty; being critical without shutting
down the debate. He also well represents and presents the dilemma that current
economic theory finds itself in, starting from a position that there is a basic
strength in the complex world of markets. He describes this as the ‘muddling
through’ explanation such as in this
piece written 9 months ago:

‘History would suggest that Sir
Mervyn King, Ben Bernanke and Jean-Claude Trichet are right to be cautiously
optimistic. Over the past 250 years, industrial capitalism has displayed a
remarkable ability to regenerate itself.’

In this piece then goes on to explore the hurdles that still
stand in the way of getting to this nirvana. More
recently he has suggested that these hurdles may be even structurally
greater and that contrary to the markets muddling through, Karl Marx may have
been right about the tendency of rates of profit to fall under capitalism and
for money to move in directions that are not beneficial to either the economy
or society. However, when it comes to policy
Larry’s Keynesianism – albeit a left version – gets the better of him and we
are back to the need for the state to pump prime optimistic spirits back into
investors and the economy to get the market working again and growth (GDP) on
the up.

Larry Elliott’s articles referred to are worth reading in
full as this little overview does not do justice to the depth and acuity of his
writing. Nearly all of his writing contains real insight and he has contributed
significantly to the wider issues of climate change and the green economy. The
point though is made, that Keynesian ‘demand side’ economic management by the
state to kick start growth, retains a strong hold on the centre left critique
of the ‘supply side’ cuts and austerity policies of the Tory and other
neo-liberals. It is a hold that currently dominates Labour Party thinking as
represented by Ed Balls.

Keynes ideas of achieving growth and avoiding recession
through the use of public spending have, historically, a great appeal to the
Labour Party. They offered a lifeline in the 1930’s when the working class were
first seen to be defeated following the 1926 general strike and the failure of
the 1929 – 31 Labour government to come up with any ideas to solve the economic
crisis without reducing public spending. The Party split over the issue and
Ramsay Macdonald the first Labour PM and many Labour MPs left to form the
National government with the Tories. It was a lifeline that appeared to work
until the 1970s enabling full employment to remain a legitimate policy aim and
unpinning the post war anti communist social democratic settlement.

For the Labour Party it was and remains a convenient way of
avoiding or suppressing issues of class and inequality. Issues of ‘post
capitalism’, the ‘end of class’, ‘relative deprivation’ and the ‘corporate
society’ are not new and are well documented in the 1965 critique of these interpretations
produced by the New Left review called ‘Towards Socialism’ as well as Ralph
Miliband in his book ‘Parliamentary Socialism’. I can remember Barbara Castle
spelling out the problem at a Labour conference in the late 1960’s using the
famous analogy of the expanding cake. If using Keynes demand management it was
possible to continually expand the total wealth through GDP growth – making the
available cake bigger - then the slice that went to the working class could
also grow at roughly the same or slightly greater pace thus avoiding the awkward
class and structural issue of unequal shares. Basically giving the impression
of the having your cake and eating it! It is this comfort zone that remains so
electorally attractive to the Party enabling a ‘being sensible’ appeal to
possible Tory voters.

Ed Miliband in some speeches has recognised however, that it
may no longer be sufficient to just stimulate the existing markets. There are
issues of the balance of the economy between finance and manufacturing as well
as good and bad capitalist practices. The social and economic structures that
markets operate within, such as regulation and perhaps even the ownership and
control of investment, may need to be addressed. For Labour the mere hint of
this will start to open Pandora’s box: once there is a recognition that markets
may not work as well as the theory it allow the idea of Marx to start to creep
back onto the stage. The cake analogy starts to crumble – I know, I know! – and
the issue of class, fairness and inequality press to be addressed. This is
especially becomes the case as the neo-liberal politics of ‘austerity’ of
making the working class pay for the bankers’ crisis has already raised of the
issue of 1% against the 99% through the occupy movement. Even
proletarianisation – expanding the working class through the reduction of
‘middle class’ benefits - has been recognised through Miliband’s equally
awkward phrase, the ‘squeezed middle’.

The structural problems facing capitalism are more deeply
seated than have yet to be acknowledged by leaders of the UK Labour Party.
Scandal over the fixing of the Libor inter-bank interests rates which looks
increasingly likely to result in criminal charges, is more than symbolic cesspit
of the current situation. Here, at the very heart of the market system, the
distribution of money in the City of London, is a systematic failure of
anything like a free market to work: it is a fix by deeply self interested
people. It ripples out to further challenge and deepens the ideological crisis
of free market neo-liberalism that has been dominant since the early 1970’s.

Milton Friedman and his Chicago boys greatly influenced by
Keynes nemesis Friedrich Hayek argued the ‘supply side’ case: that market will
work if they are free of distortions, one of the biggest of which is state
spending and the public sector.As Naomi
Klein documents in her book The
Shock Doctrine large corporations, the rich and parties that wanted to
break away from the post war social democratic settlement, brutally used these
ideas to re-gain control over labour costs and the working class – Thatcher
among them - and, until recently, were the new economic ‘common sense’ against
that of Keynes. Scandals like the Libor one, also hit at the heart of this
ideological framework: self regulated ‘free’ markets end up being rigged to the
benefit of those who have the power to access them. Since the start of the 2007
financial crisis the rapidly accumulating evidence on how the neo-liberal
theoretical narrative is itself bankrupt has given confidence to writers to
mount an effective critique. For me John Cassidy in his book How
Markets Fail provides one of the best that is written from non-Marxist
perspective. The double economic and ideological crisis has also bought to the
critical fore radical Keynesian ideas such as those of Hyman Minsky who sought to
demonstrate how financial crisis are an integral and destructive part of how
capitalism works.

What
these writers also suggest is that time has moved on and simply turning the
clock back to a Keynesian alternative may not be possible. We are where we are
in a historical process: since the time of his writing capitalism is more
integrated globally, has penetrated more areas, corporations have undermined
the role of the state where they have not captured them outright and markets
are rigged and corrupted. Trying to stimulate the economy through quantitative
easing (printing money) has just resulted in banks stuffing their coffers and
in the UK we are experiencing an investment strike with UK corporations sitting
on £754bn
alone. If the comfort zone of Keynesianism is unlikely to be easily
repeated what are the options for the left? We will have a look at the extent that
a more radical Keynesian and a distinctive Marxist perspective may provide some
answers next week.

This is the first of what we hope will be a regular –
generally weekly - email from Welsh Labour Grassroots, a network of activists
of the left and centre left of the Labour Party in Wales.

This blog also has information relating
to the basic position of WLG, a link to our existing but little used website
and, if you are a member of the Labour Party, how to join and provide support
to our activities. Sympathisers who are not LP members are most welcome to
receive and comment on our emails through our blog - just as is currently the
case on our WLG Facebook
page - and if you wish submit sources and other information to us to be added to
the posts, which may help in our discussions and joint action. All posts on the
WLG blog will be signposted through Twitter and Facebook.

As this is the first email the structure is a little
experimental and will evolve with experience and comments. It is also suffering
from new enthusiasm so is rather long.

Left week

With Boris being very really and symbolically caught by a
zip (wire) and inviting the Digger to sit with him it appears to sum up August
and the silly season. I’m sure Steve Bell will have a field day as it fully
represents the Tories and our unfortunate predicament that they are in power
over us and we have to suffer the consequences. Yet the ‘season’ does not halt
the crisis of capitalism and the financial pages remain the most interesting
read - more of which later – and horrific reports from Syria become the hardest
to read and understand.

The Cardiff South and Penarth campaign has started with
Stephen Doughty as the candidate – ‘phone 02920 877700 to be involved.

Welsh Labour
Grassroots

The last WLG meeting
on Saturday, 21 July' heard a powerful presentation from Bob Clay on the
economic, political, military and moral arguments against Trident, which we
hope will form the basis of a blog post in the near future. Also encouraging
hearing about good the work being done by newly-elected socialist Labour
councillors in Swansea, Bridgend, Cardiff, Newport and elsewhere.

Fightback

Follow the excellent stand taken by comrades in Cardiff in
support of the homeless.

Labour Representation Committee website is an excellent source of activity
both in terms of direct action, argument and action within the Labour Party.
The most important mobilisation with be the 20 October TUC demonstration for ‘A
Future That Works’ this is an opportunity to oppose all the Tories have been
doing and to demonstrate that we have an alternative as well as showing by
action solidarity with comrades across Europe. We should try to ensure that it
is the largest demonstration ever in the UK and here
the LRC has a lot of advice and suggestions about how we can help build support
within the Labour Party.

Resolutionary
socialism

A model constituency motion to support the 20th
is here
and one for the 68 is too late campaign here. Use these
motions to best effect in terms of gaining support and involving members in the
discussion raise and speak to them at your local branch first.